Automotive AR and VR Market Dynamics, Competitive Forces & Strategic Pathways

Automotive AR and VR Market Trends, Challenges & Strategic Recommendations

The automotive AR and VR market is forecast to grow from USD 8 billion in 2025 to USD 44.41 billion by 2034, driven by a CAGR of 21% from 2025 to 2034.

Unlock Infinite Advantages: Subscribe to Annual Membership

Introduction

The automotive AR and VR market is a crucial sector of the automotive technology industry. This industry deals in developing AR and VR-based solutions for automotives. These solutions are developed using various technologies comprising of augmented reality systems, virtual reality systems, mixed reality systems and others. It is used for numerous applications including driver assistance systems, navigation systems, in-car entertainment, training and simulation and some others. There are various end-users of this industry consisting of OEMs, aftermarket providers, fleet operators and some others. The growing sales of two-wheelers around the world has driven the industrial expansion. This market is expected to rise drastically with the growth of the automotive sector in different parts of the world.

• According to a report of the Economic Times, around 682937 electric two-wheelers were sold in 2022-23 that increased to 910930 in 2023-24.

Highlights of the Automotive AR and VR Market

• North America held the dominant share of the automotive AR and VR market due to the increasing demand for luxury cars in this region.
• Asia Pacific is expected to grow with a significant CAGR due to the rising trend of innovative driver assistance systems in this region.
• The augmented reality systems segment dominated the market due to its numerous benefits such as immersive consumer engagement, improved quality control, enhanced designing and some others.
• The direct sales segment led the market due to the rise in number of automotive retail shops around the world.

Automotive AR and VR: Trends in the Industry

• The automotive companies are investing heavily for integrating modern features in vehicles that includes AR and VR devices.
• Numerous car brands are adopting AR in their manufacturing plants to enhance product designing and training employees.
• The software companies are constantly engaged in developing advanced AR and VR applications to enhance consumer experience.
• Several automotive service centers are adopting AR-based repairing equipment for enhancing the repairing process.

Industry Leader Announcement

In June 2023, Udit Malhotra, the marketing Head of MG Motor India announced that, “MG’s first Digital Studio in Chennai is an embodiment of the brand’s commitment to digital innovation and customer-centric approach. We are an auto-tech brand and StudioZ fluently echoes this convergence and brings the best in technology and in automobile experiences together under one roof. This studio outlines our vision for the future of automotive retailing. With the growing significance of omnichannel brand presence, digital interfaces such as StudioZ will bring the brand closer to the customer and enhance their buying experience."

Regional Insights

North America led the automotive AR and VR market. The market in this region is generally driven by the technological advancements in automotive sector. Also, the rising trend of in-car entertainment along with presence of numerous AR and VR companies has driven the market growth in this region. For instance, in January 2023, Holoride launched Holoride Retrofit in the U.S. This device helps in enhancing the in-car experience in vehicles.

The U.S. is a major contributor of this region. In U.S., the market is generally driven by the presence of several automotive brands such as Ford, Chevrolet, Cadillac and some others. Moreover, the rising consumer preference for luxury cars along with rapid investment by software companies such as Microsoft, IBM and some others has propelled the industrial expansion in this country.

Competitive Landscape

The automotive AR and VR market is a highly competitive industry with the presence of numerous dominant players. Some of the prominent companies in this industry comprises of Continental, Microsoft, Visteon Corporation, Volkswagen, Unity, Bosch, DAQRI, HTC and some others. These market players are constantly engaged in developing AR and VR solutions for automotive sector and adopting various strategies to maintain their dominant position in this industry.

• According to the annual report of Continental AG, the annual revenue of 39408.9 million euros in 2022 that increased to 41420.5 million euros in 2023.

Market Segmentation

By Technology

• Augmented Reality Systems
• Virtual Reality Systems
• Mixed Reality Solutions

By Application

• Driver Assistance Systems
• Navigation Systems
• In-Car Entertainment
• Training and Simulation

By Vehicle Type

• Passenger Cars
• Commercial Vehicles
• Two Wheelers

By End User

• OEMs
• Aftermarket Providers
• Fleet Operators

By Distribution Channel

• Direct Sales
• Online Sales
• Third-Party Retailers

By Region

• North America
• Europe
• Asia Pacific
• Latin America
• Middle East and Africa